FIXED MANUFACTURING OVERHEAD, VARIANCE ANALYSIS Esquire Clothing allocates fixed

Question

FIXED MANUFACTURING OVERHEAD, VARIANCE ANALYSIS

Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2014 are budgeted, $62,400, and actual, $63,916.

REQUIREMENTS:

1. Compute the spending variance for fixed manufacturing overhead. Comment on the results.

2. Compute the production-volume variance for June 2014. What inferences can Esquire Clothing draw from this variance?

Explanation / Answer

Fixed Overhead Variance = Actual Fixed Overheads- Budgeted Fixed Overhead Spending variance = 63916-62400 Spending Variance = $ 1516 Unfavourable Production Volume Variance = Actual Fixed Overhead- Budgeted Fixed Overhead) Budgeted Overhead Rate) The budgeted fixed overhead rate is not given so I am not able to calculate the Production Volume Variance

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